Mining the value of the IoT

Michael Chui on the hidden value locked within the Internet of Things.

Der Bergbau (The Working of Mines) (mid-1800s), by Paul K on Flickr

Jon Bruner and Dr. Michael Chui recently discussed Chui’s latest research on the Internet of Things as part of our IoT Profiles Series. A full recording of their conversation is embedded at the end of this post—and it’s well worth watching—but here’s a look at a few key points that were made. Chui will expand on these ideas and debut his new report during his session, “Beyond the hype; Mining the value of the IoT,” at the upcoming O’Reilly Solid Conference (June 23-25 in San Francisco).

Comparing B2B and consumer applications

A lot of the hype surrounding the IoT is centered around consumer products, and while Chui sees tremendous value in the consumer arena, the business-to-business (B2B) market holds particular promise. “There’s double the amount of value in B2B applications as there are in consumer applications,” he says. The value, he says, “is in logistics and manufacturing and many of those applications.”

Even in consumer applications, he adds, B2B2C (business-to-business-to-consumer) applications can multiply value. ”When, in fact, the consumer health care health monitor can be connected to my provider, to my doctor, and have that continuous stream of health data actually connect up to the professional health care system, that’s where we think a lot of value can be created.” [Discussed at the 5:08 mark.]

Engineering inspiration, one API at a time

“One of the really critical technological developments is that this area is now approachable by individual engineers and even hobbyists,” says Bruner. “You can approach hardware now if you have nothing but a software background. It’s all programmable. It’s all software defined. It’s all digital. Then, I think, in turn, that will drive a lot of this adoption because these people are going to develop modular hardware that has some sort of abstracted API on it. Developing a smart home application, you don’t have to understand the constraints under which utilities operate. You don’t have to imagine the entire stack all at once and develop it out, you just have to develop something that has a decent API for other people to connect to.”

“The locus of innovation or the inspiration of innovation can go in the opposite direction,” Chui agrees. “The idea of doing experimentation, of doing behavioral customization, personalized offers, A/B testing. Something that we do naturally on the Web. Something we do naturally with mobile. Now we can bring all those techniques from the virtual world, from software into hardware. I think that’s exciting as well.” [Discussed at 10:38.]

Bringing the mentality (and risks) of big data to the IoT

“About 10 years ago we started to see the emergence of the idea of big data,” says Bruner. “That has become the main business imperative, the main management imperative over the last perhaps five years, is that you instrument, measure, and optimize everything.”

But big data made its first inroads in industries that were already online: finance, retail, advertising, etc. Bruner feels that the sheer physicalness of the IoT and the hardware movement will bring “this kind of mentality, this kind of stack and these kinds of tools into areas that haven’t previously been encompassed by the Internet. From agricultural fields to oil platforms, these are areas that haven’t yet been subjected to the kind of data-driven management.”

Chui agrees. “A lot of the levers for value and a lot of the ways in which we can improve our lives that big data enables, now we’re finding out you can extend that to greater places.”

Chui adds: “It extends the risks, of course, as well, whether it’s areas of privacy or intellectual property or confidentiality, but it expands that ability for all of those things to happen. I think this software-to-hardware move, in terms of innovation, is quite powerful.” [Discussed at 12:31.]

Other IoT-related risks

“The IoT, in some ways, at least two ways multiplies the risks associated with cyber security,” says Chui. “It just increases the surface area of potential breaches.” Now, he says, it’s not just your data center, your mobile device, or your notebook, that is vulnerable, but all kinds of physical devices—and the connections between them—are at risk.

“The other way in which IoT actually increases risks is it, quite frankly, increases the consequences of a breach. What happens when there are a million connected cars that can be hacked, or a nuclear reactor, or a chemical plant, etc?” Chui asks. [Discussed at 13:35.]

The value of unused data

“As we did our research and we looked at some of the IoT systems that are already out there, we asked ourselves, how much data already exists?” says Chui. “How much of that data is actually used?” Offshore oil platforms, it turns out, have 30,000 sensors on them, but less than 1% of the data is used. “We find this again and again and again,” Chui says. “This exhaust data is literally just thrown away. Even data that is used in a lot of these IoT or connected systems that already exists, most of it’s used for two purposes: anomaly detection and alarms or real-time control, just making sure that things are coordinated.

“We looked at the value you could achieve from instrumentation and measurement, a lot more of it could come about if you actually used this data for optimization, for optimizing processes and prediction. Again, if you look at not even deploying new devices but the data streams that already exist, that are embedded in the physical world, number one, you could use a lot more data that’s out there, which exists already. Number two, you can transform that use simply from alarms and real-time control to optimization prediction. There’s just huge opportunity to do that.”

Other subjects

Bruner and Chui addressed a number of additional topics during their discussion, including:

  • Parsing the IoT (beyond verticals) [1:20]
  • C-level strategy [15:50]
  • The convergence of information technology and operations technology [17:20]
  • The IoT skill gap [21:00]
  • The baseline for design [24:58]
  • The value of interoperability [32:06]
  • Predictive maintenance [35:36]
  • Proprietary data [39:30]
  • IoT and health care [41:30]
  • After-market services [46:00]

You can see the full conversation in the following video:

Related: See similar discussions in our IoT Profiles Series.

Cropped image on article and category pages by Paul K on Flickr, used under a Creative Commons license.

tags: , , ,